WSJ: Are Streaming Deals Drying Up for Mining Companies?

By

Johanna Bennett

Dec. 29, 2015 2:52 p.m. ET

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As if mining companies don’t have enough troubles.

The Wall Street Journalreports that a key source of financing for troubled mining concerns is growing scarce. Specifically, the companies that participate in so-called “streaming deals,” providing large lump-sum payments in exchange for metal deliveries, are running out of capital after striking a record number of deals in 2015.

As the WSJ writes:

The drop in lending capacity reduces mining companies’ lifelines as they contend with a protracted downturn. Tumbling metal prices and plentiful supply of everything from iron ore and copper to nickel and coal have reduced profits and mining companies’ ability to repay debts.

Meanwhile, traditional avenues for raising cash, like bond or stock sales, have essentially closed to all but the most well-capitalized mining firms.

How many deals? Glencore (GLEN.UK), Vale (VALE) and other mining companies raised more than $4 billion in cash through the pre-sale of metals, or quintuple the sum generated in 2014.

Yet in 2016, Silver Wheaton (SLW), Royal Gold (RGLD) and Canada’s Franco-Nevada (FNV) will start the year with an estimated $1.4 billion to deploy, the newspaper reports, citing data from Canaccord Genuity.

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